Electric rate relief deal includes rebate checks, bill credits

Adriana Colindres

Tuesday

Jul 24, 2007 at 12:01 AMJul 24, 2007 at 12:12 PM

Rebate checks, each potentially worth hundreds of dollars, could arrive in the mailboxes of Ameren Illinois’ electricity customers by September, state officials said Monday while unveiling details of a $1 billion electric rate relief deal.

Rebate checks, each potentially worth hundreds of dollars, could arrive in the mailboxes of Ameren Illinois’ electricity customers by September, state officials said Monday while unveiling details of a $1 billion electric rate relief deal.

Lawmakers have not yet voted on the deal, but Senate President Emil Jones and House Speaker Michael Madigan indicated they expect it to easily win legislative approval, perhaps as soon as this week.

They and other state officials, including Attorney General Lisa Madigan, praised the electric rate agreement during a fly-around to Peoria, Decatur, Cahokia, Marion and Quincy.

“It was not easy getting to this point,” Jones said in Cahokia. “It took a lot of hard work.”

At an earlier stop in Peoria, Michael Madigan said legislative debate on electric rates at times had been “acrimonious.”

Lawmakers have been talking about skyrocketing electric rates since last fall but could not decide on the best way to address the problem.

The attorney general said the complexity of the subject matter contributed to the lengthy negotiations that produced the $1 billion deal.

“We’re not just dealing with short-term rate relief,” she said. “We’re also dealing with long-term reforms. The long-term reform part of it was much more contentious.”

The main component of the long-term reform involves creation of the Illinois Power Authority, which will oversee state-regulated utilities’ purchase of electricity in the future. Once the IPA is launched, the reverse auction that was used last year to set the present electric rates will be discontinued.

The reverse auction improperly led to “windfall profits” for power generators, including those sharing a parent company with ComEd and Ameren, said Michael Madigan, who touted the benefits of the IPA at every stop on the fly-around.

“Public power in America has had a good history,” he said in Quincy, citing Springfield’s City Water, Light and Power as an example. “Generally speaking, where power comes from public power operations, it’s cheaper than a private company where there are private investors.”

Rebate checks, meanwhile, will go only to Ameren customers who are caught up on their outstanding power bills or who are no more than 60 days overdue.

Rebates will take the form of credits on bills for Ameren customers who are more than 60 days past due, as well as for all Commonwealth Edison customers.

The rebates, which will cover about the first half of 2007, are intended to provide Ameren customers partial compensation for the extra money they’ve been paying because of higher electric rates that took effect this year. Rates rose dramatically, sometimes doubling or tripling consumers’ power bills, because a long-standing freeze on electric rates expired in January.

Rates also increased for ComEd customers, but the hikes hit Ameren consumers harder, especially those who use electricity to heat their homes. Those all-electric customers likely will get the biggest rebate checks.

The electric-rate agreement will reduce, but not eliminate, the increases that kicked in this year. For Ameren customers, this year’s higher rates will be slashed by 40 percent to 70 percent. For ComEd customers, this year’s rate increase will be trimmed by about 45 percent.

Customers of Ameren and ComEd will see credits on their bills, starting later this year and continuing until 2010 to phase in market rates for electricity. The size of the credits will depend on customers’ power usage, but the smallest will be $100 a year, said Sen. James Clayborne, D-Belleville, a key negotiator on the issue.

Clayborne said the phased-in rate increases for Ameren customers would be 20 percent in 2007, 13.5 percent in 2008 and 7.5 percent in 2009. For ComEd customers, phased-in rate increases will be 13.5 percent in 2007, about 6 percent in 2008 and about 5 percent in 2009, he said.

Most of the $1 billion for the rate relief package — 75 percent to 80 percent — came from power generators Exelon, Dynegy, Ameren Generating and Midwest Generation, Clayborne said. The rest came from ComEd and Ameren.

Under the pending agreement, the state would not consider enacting an electric rate freeze or a tax on power generators for four years, Clayborne said.

Lisa Madigan said that as a result of the pending electric deal, she expects her office to drop legal action related to the earlier controversy. That would include a March complaint that the attorney general filed with the Federal Energy Regulatory Commission, which alleged that 15 power suppliers colluded last year in the reverse auction and artificially inflated electricity prices.

The fly-around’s largest turnout came in Marion, where the crowd easily exceeded 100.

“Thank you, thank you, thank you for what you’ve done,” said Sen. Gary Forby, a Democrat from nearby Benton who spoke at the Marion news conference. “I’ve been carrying this weight on the back for a long time, and I’m ready to get it off.”

Forby, one of many lawmakers besieged by phone calls and letters from constituents angered by their higher electric bills, tried in April to pass a rate freeze bill in the Senate. But his bill became the target of an unusual parliamentary maneuver — executed by Senate Democratic leadership — that stripped ComEd out of legislation that previously had covered ComEd and AmerenCIPS, AmerenCILCO and AmerenIP.

He made a veiled reference to that episode, saying he “had a little issue” when he tried to pass a freeze bill in the Senate a few months ago.

“Today, we’ve got a billion dollars on the table,” Forby said Monday. “Is that enough money? Never will be enough money. Never will be enough. But it’s something I think we can all live with.”

Adriana Colindres can be reached at (217) 782-6292 or adriana.colindres@sj-r.com.